Qantas Set To Retest Lows

This story features QANTAS AIRWAYS LIMITED. For more info SHARE ANALYSIS: QAN

By Michael Gable 

We have seen a fantastic performance in the market during the last two weeks where it has rallied from around 5150 to 5450 in that brief period of time. Everyone that we talk to can understand the reasons why the market will be robust, but no-one appears to be admitting to us behind the scenes that a 300 point rally in two weeks was to be expected.

Our new model portfolio which is restricted to the top 200 stocks is off to a good start. Since introducing it last week, it has slightly outperformed the market. One week doesn’t count for much at all of course, but with a very conservative cash holding of 13% to start with, logic tells you to expect underperformance when markets rally very strongly. With a lot of firepower in reserve, we are well placed to take advantage of any cooling off in the market. So while it is early days, we feel that it’s a good omen for the months ahead.
 

Qantas

 

Our last update for Qantas ((QAN)) was on 1 October when it as trading at $1.51. At the time we stated “Now that is struggling to surpass our target and the sugar rush from last month’s results are wearing off, we expect the share price to fall back into the $1.30 – $1.40 zone.” Not only did it fall, but it went as low as $1.245 on very large volume. This share price action is telling us that there is a good chance that it will at some point retest the August low at $1.185. At that point there may be another technical trade in it on the long side, but we will have to reassess at that point.
 

Content included in this article is not by association necessarily the view of FNArena (see our disclaimer).
 
Michael Gable is managing Director of  Fairmont Equities (www.fairmontequities.com)

Michael assists investors to achieve their goals by providing advice ranging from short term trading to longer term portfolio management, deals in all ASX listed securities and specialises in covered call writing to help long term investors protect their share portfolios and generate additional income.

Michael is RG146 Accredited and holds the following formal qualifications:

• Bachelor of Engineering, Hons. (University of Sydney) 
• Bachelor of Commerce (University of Sydney) 
• Diploma of Mortgage Lending (Finsia) 
• Diploma of Financial Services [Financial Planning] (Finsia) 
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2

Disclaimer

Michael Gable is an Authorised Representative (No. 376892) and Fairmont Equities Pty Ltd is a Corporate Authorised Representative (No. 444397) of Novus Capital Limited (AFS Licence No. 238168). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.

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